Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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Robert Kiyosaki – The Rich Don’t Work for Money

Robert Kiyosaki reflects on how as a child he was sent to a public school comprised of mostly upper-class youth. He was jealous of the material goods his classmates possessed, such as new baseball gloves and bicycles. He decides he wants to start his own business and asks his best friend, Mike, to be his partner. They concoct a scheme to make money out of their neighbors’ lead toothpaste tubes by melting them down and using a nickel as a template. Kiyosaki’s poor father catches them making counterfeit nickels. He applauds their ingenuity, but informs them that their operation is actually illegal and won’t work. His father suggests that they talk to Mike’s dad if they truly want to learn how to be rich. Mike’s father had a reputation in town for his business acumen and talent with earning money. The two agree to meet with Mike’s father the following weekend. Their education with Mike’s father (aka “Rich Dad”) begins. He offers to help them learn to be rich if they agree to work at one of his superettes for 10 cents an hour, three hours every Saturday. Kiyosaki works for four shifts and finds the work boring and the pay disappointingly low. He decides he wants to quit. He confronts Mike’s dad and informs him that he has not held up his end of the deal – he hasn’t taught him anything. He blames Mike’s dad for paying him poorly and treating him unfairly. Mike’s dad explains to him that he has just taught him a lesson, a lesson that mirrors real life. He goes on to say that you can’t blame your employer for your economic troubles and that ultimately you are responsible for your own well-being. He summarizes his first lesson: ”The poor and the middle class work for money. The rich have money work for them.” Mike’s dad informs Kiyosaki that if he wants to keep learning from him, he will return the next week and continue to work at the superette – for no pay. Kiyosaki is angry and bewildered, but returns the next week nonetheless. After several more weeks of working for no pay, Mike’s dad shows up at the end of one of their shifts. He offers to pay them 25 cents an hour, but Kiyosaki can tell that he is testing them. He then offers to pay them up to $ 5 an hour and although Kiyosaki is tempted, he resists. Pleased, Mike’s dad agrees to teach them more about money. He advises them to lose their fear of not having money and their greed for large amounts of money. He explains...

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Robert Kiyosaki – The Definition of Wealth

~ Robert Kiyosaki ~ When I was a young boy, my rich dad told me about the difference between the rich and the wealthy. “Many people think that being rich and being wealthy are the same thing,” said rich dad. “But there is a difference between the two: The rich have lots of money but the wealthy don’t worry about money.” What rich dad meant was that while the rich might have lots of money, they also might have lots of expenses that keep them up at night. Or they might have a high paying job but have to get up to work everyday and have fear of getting fired or laid off. The wealthy, on the other hand, don’t have these worries. Why? What’s the difference? The definition of wealth The definition of wealth is the number of days you can survive without physically working (or anyone in your household physically working) and still maintain your standard of living. For example, if your monthly expenses are $ 5,000 and you have $ 20,000 in savings, your wealth is approximately four months or 120 days. Wealth is measured in time, not dollars. The difference between being rich and being wealthy In 1989, Kim and I became millionaires, but we weren’t financially free until 1994. This is because there’s a difference between being rich and being wealthy. By 1989, our business was making us a lot of money. We were earning more and working less. We had what most people considered financial success. Though we were rich, we still were not wealthy; much of our time was spent working to build our business and its systems. Our goal was to build the business to the point that it would cover all our expenses from cash flow each month—without us working. Additionally, we were invested in other assets like real estate and commodities to add to our cash flow. By 1994, the passive income from our business and assets was greater than our expenses. At that point, we were wealthy, not just rich. It’s not what you make… Ultimately, it’s not how much money you make that matters but how much money you keep—and how long that money works for you. Every day, I meet many people who make a lot of money, but all their money goes out of their expense column. Every time they make a little more money, they go shopping. They often buy a bigger house or a new car, which results in long-term debt and more hard work. Nothing is left to go into the asset column. It’s this kind of behavior that separates the rich...

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Robert Kiyosaki – 8 Surefire Ways to Earn Passive Income

Everyone wants to make more money, but very few want to work more hours. The best way to work less and make more money is to learn how to generate passive income. Passive income can be described as income that is received at regular intervals that does not require a lot of work to sustain it — money that you automatically make whether you work any more or not. If you want to earn more money, the following are 10 ways to make money passively in no particular order for income potential: 1. Dividend Investing Becoming a stockholder in a company is a great way of earning income with very little time involved. Buying shares in the business, you can then decide whether you wish to receive quarterly dividend checks (money earned from your investment) or to reinvest the money back into more shares. Dividend investing is easily one of the most popular sources of passive income. 2. Rental Property When you buy rental property, you can start receiving monthly income almost immediately. The work involved requires buying the property one time only. After your mortgage on the property is paid, anything left over is considered passive income. 3. Peer-to-Peer Lending, e.g., Lending Club Online you will find a wide variety of peer lending groups. When you become an investor, you are simply lending a certain amount to other members of the group who need to borrow money. With Lending Club, you can expect to earn a 9% interest on average. 4. Building Websites If you have a knack for building websites that can generate a high amount of traffic, you have a great opportunity to earn passive income. Many people find that by simply creating an information site about a topic they are passionate about, they can get high traffic and earn income by either selling the advertising space on the site or by joining an ad revenue sharing program. Website building is hands-down the most reliable way to make money online. 5. Bonds Many individuals are earning a lot of passive income by investing in bonds. These treasury bonds, also known as T-bills or T-bonds, are long-term investments. When the bonds mature or come due, you earn money on them. For example, you could purchase a $ 100 U.S. Savings Bond for $ 50, but when it comes due, you get the $ 100. 6. Writing a Book If you write a book, you can earn royalties for as long as people keep purchasing it. Many great authors receive monthly royalty checks on books they wrote twenty years prior. All you have to do is look at authors like Stephen King and Danielle...

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Robert Kiyosaki Buy Gold and Silver Protect against Inflation

Robert Kiyosaki Buy Gold and Silver Protect against Inflation Share and...

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Robert Kiyosaki – Family Investment Offices: When Do They Make Sense?

Bill Gates has one, and so does Michael Dell. But should every super-wealthy family form its own investment office? Family offices often fulfill multiple functions that wealthy families need, such as managing philanthropic pursuits and estate planning, Bill Woodson, Managing Director for Credit Suisse’s Family Wealth Management group, said. But when it comes to investment advice, some families outsource investing strategy entirely to banks or other investment consultants. Others closely control investments in a certain asset class, but outsource the rest. Some families, however, prefer having their entire investment portfolio under one roof – their own. That requires hiring a top-notch chief investment officer, who then works with third-party firms that can offer specific expertise or provide access to capital markets, Woodson said. Bill Gates, for example, created Cascade Investment to manage his Microsoft riches, while the Dell family has MSD Capital. Bringing the CIO Home The size of the family’s total assets dictates whether a family investment office makes sense. A family with a net worth of $ 1 billion or more can certainly justify – and afford – hiring a top-flight investment manager, Woodson said. With assets between $ 500 million and $ 1 billion, the decision requires a more careful cost-benefit analysis. Below $ 500 million, “it’s very hard to make it work properly” because spending seven figures to hire a savvy Chief Investment Officer and buying the trading and back-office technology he or she needs can be onerous, Woodson said. “Keep in mind that when a family is hiring a CIO, they’re competing against firms like Credit Suisse and others for similar talent,” Woodson said. “They are expensive staff. They are the most experienced professionals with the exception of the president (of a firm) and often times even more expensive than the president.” A confidential survey of single-family offices released last year by the Wharton Global Family Alliance said 37 percent of single-family offices had less than $ 500 million in assets under management, while 42 percent had more than $ 1 billion. On average, single-family offices managed nearly 45 percent of the wealth of billionaires and nearly 66 percent for millionaires. But the survey also showed that billionaire family offices performed better than those of mere millionaires, suggesting that having more money to invest leads to better results. A Family-Specific Investment Strategy Most families create their own investment offices because they want to keep a tight rein on investment strategy. Some also think they can perform the function cheaper in-house, rather than outsourcing to a third-party.  Some offices target long-term, time-consuming asset classes such as private equity that require substantial in-house staff, Woodson said....

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Robert Kiyosaki – Want to Retire? Stop Chasing Returns

When you’re in the accumulation stage of life, investment returns are an important consideration for achieving various financial goals. Once you retire, however, you live on income, not investment returns. Unless you acknowledge this basic fact and change your mind-set from a return chaser to an income accumulator well before you plan to retire, you increase the risk of outliving your assets. It isn’t easy to change old habits. When we’re in our 20s, 30s, and 40s, many of the goals we plan for require accumulation of a fixed amount that will be needed on a specified future date. The fixed amount will either be used all at once, e.g., down payment on a house, or over a certain number of years, e.g., college. In either case, the required amount can be projected using an appropriate assumed inflation rate. The ability to achieve the foregoing types of goals is dependent upon three things: (a) amount of time between commitment to begin funding the goal and the future date when the targeted amount is needed, (b) rate of return needed to achieve the goal which can vary depending upon whether it’s funded by a lump sum, installment payments, or a combination of both, and (c) availability of funds required to achieve the goal. The second item, rate of return, is critical. The greater the return, the less the amount of funds required to achieve a particular financial goal. In today’s low-interest rate environment with few opportunities available to capture return from fixed-income investments such as CD’s and bonds, investors are chasing returns more than at any other time in recent history. For those of us in our 40s, 50s, and 60s who want to plan for retirement, we need to gradually shift our focus from investment returns to income. A constant flow of sustainable income that will cover our expenses is essential for minimizing the possibility of outliving our assets. Unlike asset accumulation goals that are attained with an inflated fixed amount that’s used all at once or over a defined number of years, retirement is an open-ended proposition with many unknown variables. For starters, the retirement date, itself, can be a moving target. It’s often accelerated for health and other reasons; however, it’s also deferred in many cases. Second, we’re unable to plan for the number of years we’ll spend in retirement since we don’t know when we’re going to die. Finally, more so than at any other time in our lives, we need to acknowledge, and plan for, the potential for sizable one-time and continuing health-related expenses, with the likelihood of occurrence increasing at the end of our...

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Robert Kiyosaki – 5 Things Never to Put On A Credit Card

Credit cards are powerful financial instruments, but cardholders must use them carefully to avoid becoming trapped in a cycle of debt. At the same time, it can be difficult for cardholders to contemplate a huge expense knowing that a bank has already extended them sufficient credit to just charge it. Yet a credit card is often the worst means of finance. Credit card debt is unsecured and typically carries a higher interest rate than a car or home loan. And unlike a home mortgage or student loan, credit card debt is never tax deductible. Of all the things financed with credit cards, here are the five worst. College Tution Many adults can trace their debts back to their college years when they didn’t fully appreciate how difficult it would be to pay off credit card charges, especially after interest starts to compound. And in many cases, college graduates aren’t able to land a job as soon as they hoped, or they have insufficient income to start paying off their debt. Rather than using a credit card, higher education can be funded through low-interest student loans, scholarships, grants, and part-time jobs. And if these sources are inadequate, students can consider a less expensive school or delay enrollment until they have more savings. Taxes When taxpayers find themselves with an unexpectedly large liability, it can be tempting to just charge it. And conveniently, the IRS makes it easy to use a credit card to make payments through one of several companies that they authorize to accept money on their behalf. However, there are several reasons why you shouldn’t. First, the payment processors will collect a fee of 1.88 percent to 2.35 percent. Also, the IRS will allow you to set up a payment plan with a more competitive interest rate. IRS underpayment interest rates change each quarter, but are currently at 3 percent, far better than any credit card’s standard interest rate. And finally, taxpayers should seek to have their withholding adjusted to ensure that they are not underpaying taxes in the future. Big Wedding Planning a wedding is not easy, but couples need to live within their means and avoid financing the occasion with their credit cards. It is a special day for newlyweds, but it is not worth it when they are forced to begin their lives together underneath a mountain of debt. Vacation People take vacations to take breaks from their everyday lives and to reduce stress. But when travelers finance their trips with their credit cards, they will only be returning to the difficulties caused by their debt. Going camping, staying at hostels, and visiting family and friends are just a few of the...

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Robert T. Kiyosaki – Why Invest In Oil ?

Rich Dad , Robert T.Kiyosaki latest video about why we should invest commodities such as oil, gold, silver and other precious resources. Here in this video, Robert talks more on the reason why invest in oil as a long term financial success and how you can do it too in support with Rich Dad advisor , Tom Wheelright. Feel free to share the information worldwide and let them be educate by the financial education from Rich Dad. Share and...

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Robert Kiyosaki – 4 Reasons Why I Don’t Use A Mortgage Broker

I can see the benefits of using a mortgage broker; buying a home is stressful enough without having to worry about visiting multiple lenders and trying to understand the different rates, terms and conditions of your mortgage. If the mortgage broker is doing their job, they will find you the best rate and terms according to your needs. That all sounds pretty good, so why aren’t more people using a mortgage broker when they buy a house?  Let me share 4 reasons why I don’t use a mortgage broker, and probably never will: 1. They Push the 5-Year Fixed Rate Most of the mortgage broker ads I’ve seen claim you will save money using their services because they can locate the lowest 5-year fixed rates in the market.  The problem is, home owners would have been better off opting for the variable rate instead of the 5-year fixed rate nearly 90 percent of the time. Using a mortgage broker to obtain the lowest 5-year fixed rate likely ensures that you will be worse off financially in 5 years while your broker and your lender make money. 2. I Had a Good Relationship With My Bank Even though I recently became fed up with my full service bank and switched to no fee banking, I actually had a pretty good relationship with my bank.  Walking into my branch and asking about mortgage rates was not an intimidating process for me as a first-time home buyer. Now that I’ve moved into my 3rd home and gone through several mortgage renewals and a mortgage refinancing I’ve received plenty of perks for staying with one lender, including waiving home appraisal fees and interest penalties.  And my variable interest rate mortgage has always been within 0.10% of the best available rate in the market. 3. Bad Reputation My first impression of a mortgage broker was not at all positive.  They send out flyer’s in the mail encouraging people to refinance and use the money to take a vacation, buy a new car, or increase their amortization and consolidate debt.  They post rates on their website claiming their mortgage rates are more than 2.00% lower than the big 5 bank rates, even though they are clearly displaying the banks’ posted rates and not the best available rate online. Mortgage brokers are also quick to spread fear over pending interest rate hikes while strongly encouraging home owners that they need to “lock-in” now.  Much like mutual fund sales people, mortgage brokers get paid (or get paid more) if you buy a particular product.  Yes, their services are free to you, but you need to understand how they are being compensated for your business. 4. Do It...

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Robert Kiyosaki – How To Lower Your Monthly Student Loan Payments

Imagine having over six figures in student loan debt, making less than $ 30,000 a year and supporting a spouse who is also in school.  The monthly payments alone could be well over $ 1,000 a month.  This was the case for a couple that I recently helped.  The good news is that they were able to cut their payments in half after I explained how income based repayment worked.  Unfortunately, they were struggling for months financially and thought that it was impossible to lower their student loan payments. According to a 2012 study by FinAid.org, 1.5% of all undergraduate and graduate students finished school with over six-figures of student loans.  The majority of students with high loan balances were graduate and professional students; yet, undergraduates still represented a slim portion of the statistic at 0.2% Before you stop making payments on your student loans and severely damage your credit score, consider applying for the Income Based Repayment (IBR) program. What is Income Based Repayment? Income Based Repayment is a way for you to manage your federal student loans by lowering the amount you pay each month.  In short, the IBR program extends your federal student loan from the typical 10-year repayment term to a 25-year repayment term.  Yes, a longer term means that you’ll end up paying more interest in the long run, but the program is based on income.  It’s designed to make your student loan payment more manageable during your lower income years and to increase the payments as you earn more. How Does IBR Work? For most eligible borrowers, the IBR loan payments will be less than 10% of your income.  The chart below shows how it considers family size and income when calculating eligibility.  A family of four making $ 60,000 would only have to pay 6.4% of their income towards their federal student loans.  If you earn below 150% of poverty level, your required loan payment would be $ 0. The IBR has an interesting feature called the 25-year loan forgiveness period.  If, after making qualified IBR payments for 25 years, you still have a balance on your federal student loans, they may be eligible for forgiveness.  Yes, the government will forgive your federal student loans, but in order to qualify, your income would need to remain below the limits for 25 years.  Reaching the 25-year loan forgiveness period shouldn’t be a goal since you would be better off trying to earn more and paying off your loans earlier. Loans Covered Under IBR Not every loan will be covered under the Income Based Repayment plan.  Only certain federal loans will qualify, so your private student loans are not...

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